New Market
The Online Confluence of CellarTracker and Vinfolio
by Michael Steinberger - Wine & Spirits
Fall 2009
The Internet is revolutionizing the way wine information is disseminated; could it soon change the way that wines are priced? On July 8, Vinfolio Marketplace, an online fine wine exchange created by San Francisco-based Internet merchant Vinfolio, made its debut. Thanks to the partnership that Vinfolio forged this spring with Cellar-Tracker, Marketplace came into existence with 12 million bottles of potential inventory worth an estimated $2 billion. CellarTracker with some 80,000 registered users, is the most popular Web-based cellar management tool; and with nearly one million tasting notes posted by its users, it is one of the most compelling examples of how the digital age is empowering amateur critics. With the advent of Marketplace, it is possible that those amateur critics might now join professional critics in influencing wine valuations.
Marketplace is a peer-to-peer wine exchange in which buyers and sellers execute transactions directly with one another (although their identities are kept anonymous). It is not the first of its kind; Liv-ex, based in London, is an online trading platform for wine merchants. However, unlike Live-ex, Marketplace is open to both regular consumers and members of the trade. Like a bricks-and-mortar auction house, Vinfolio inspects all wines before they are delivered to buyers and is responsible for making delivery (to states where shipping is allowed). Sellers also incur a 15 to 20 percent transaction fee. (There is no buyer's premium.) But in contrast to traditional auction houses, wines don't have to be consigned in advance of their sale, there are no minimal lot sizes, sellers set prices at their own discretion and sales can be consummated immediately. Marketplace doesn't include any pre-1970 wines (which could raise issues of authenticity and provenance; it also limits bottle sizes to 6 liters or less).
The collaboration between Vinfolio and CellarTracker is a marriage of expedience. Like CellarTracker, Vinfolio offers cellar management capabilities, and until the companies teamed up for Marketplace, they were competitors. Eric Levine, CellarTracker's founder, says the decision to work together sprang from the realization that each had what the other wanted. In creating Marketplace Vinfolio was establishing the kind of online wine exchange that many CellarTracker users, eager to buy and sell among themselves, had come to desire. Conversely, CellarTracker's vast number of members and wines gave Marketplace a boost heading into its launch. According to both Levine and Steve Bachmann, Vinfolio's president, Marketplace will make it possible to sell a huge army of wines for which there has been no secondary market to speak of, given that they are neither rare enough nor prestigious enough to attract the interest of the established auction houses. "It is a means of accessing wines that people otherwise would not be able to get their hands on," says Bachmann. This is one aspect of marketplace that seems to hold particular appeal for potential users. Wilfred Van Gorp, a Chicago-based collector and CellarTracker member, says that what interests him is access to the enormous inventory. "If I'm searching for a niche wine, it might be more likely to be found there than at a traditional auction," he says.
But in addition to getting niche wines in the hands of people who covet them, it would seem that Marketplace also has the potential to affect wine prices. Bachmann thinks that boutique producers may well decide to sell some of their production via this outlet, and the prices that the wines fetch online could end up dictating the prices that are charged at the cellar door or via mailing lists. Certainly, if the wines are fetching higher prices online than what is being charged in situ, the latter will be brought in line with the former. Conversely, if consumers can buy a pinot more cheaply via Marketplace than through a mailing list, the winery may feel compelled to cut the release price.
"It may create a feedback loop on the consumption side," says Bachmann, "If a lot of people are involved, it could put some pressure on retailers in terms of pricing."
Obviously, all this is speculative. Marketplace may prove to be a "game-changer," to use a phrase that has been tossed around liberally by some early enthusiasts, or it could just as easily change nothing. But what certainly seems to be changing is the nature of wine criticism. Thanks to the Internet, amateur or "uncredentialed" critics are beginning to influence consumers, and this influence will likely grow more pronounced in the years ahead. According to LeVine, CellarTracker scores may soon be cited by retailers right alongside professional scores, and he is looking for ways to optimize his service so that users can identify reviewers whose opinions they particularly value, a la amazon.com. Given the size of CellarTracker's audience, this bas the potential to elevate the influence of some amateur critics to a level approaching that of the pros, and because of the CellarTracker-Vinfolio collaboration, Marketplace now looms as a means by which those critics could see their influence extend to pricing.
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